Should I open a S&S ISA?

Cameron1590_2

Hi All,

I'm after some advice. I am looking to start putting some money aside for a little nest egg in the future. No particular plans or wishes that I want the money for just something to fall back on in the future.

I am in my 20s and have a mortgaged property, I have around 2k saved in high interest savings/current accounts. I was thinking about putting a very nominal amount into a s&s isa, around £100 to start with followed by a monthly top up of £50. I don't have any plans to draw the money anytime soon and understand that investing is a long term plan and not short term.

Is it worth me doing? Or am I bet putting the cash in a savings account for the time being until I can commit more money to a s&s isa?

Thanks

george4064

The earlier you start, the better.

jimjames

I agree with George, worth starting as soon as you have some money spare. Also means you get to see how markets work and the impact of rises and falls so you're aware of it and understand before your pot gets too big.

eskbanker

Cameron1590 wrote: »

Is it worth me doing? Or am I bet putting the cash in a savings account for the time being until I can commit more money to a s&s isa?

The usual advice on here is to build an emergency rainy day fund of 3-6 months worth of income (or outgoings) in readily-accessible cash form, to cover for unexpected events such as job loss, ill health, family crisis, major premature spend on cars, boilers, white goods, etc.

It is only a rule of thumb when all is said and done, and we have no idea how the rest of your finances stack up, but £2K of savings does seem a bit light before starting to go down the investment route....

TheShape

I too think that investing £50 a month is worthwhile. It gets you started, helps you 'get a feel' for investing and gets you into a regular habit.

However, I'm going to suggest spending some time building your cash savings. £2k isn't a huge savings pot and an unexpected event (loss of income, boiler packs-up, car repairs) could wipe out most of that in no time. 5% in a current account/regular saver combo could see you grow that significantly over the next 12 months or so. Having a decent cash/emergency fund has given me a lot of confidence to invest going forward.

gt94sss2

eskbanker's advice is sound. Make sure you have a sufficient rainy day fund before you start to invest in an S&S though its good you are thinking about this early.

You also don't mention if you have a pension but definitely worth getting one asap if not especially if your employer contributes to it..

Bravepants

Yes, I wish I had started investing properly in my 20s. Even £50 to £100 is a good start in something simple and passive, until you know the ropes. Don't get worried about falls and rises in the market, just keep paying in monthly!

Check out the passive investing section of monevator.com, and the cover page is particularly worth reading at the moment.

As your career progresses and once you get above the 40% tax threshold, think about adding extra into your pension. You may want to do that anyway, to make sure you have extra stashed for your future, and if you want to retire from age 55. With good investment performance you could even find yourself able to retire much earlier - need S&S ISA or other investments for that though. But don't sweat it, don't forget to enjoy life.

I agree however that you should have an emergency cash fund established as mentioned above.
Good luck!

AnotherJoe

Things to do, in order;

1 Rainy day fund (More than £2k. £5K as a minimum and you can still get good interest on that)
2 Start pension and pay enough to get maximum employers contribution as a minimum
3 Save for house in a LISA (if you are planning to buy one of course )
4 Start investing in an ISA.

You appear to be around half way to point 1.

TheShape

AnotherJoe wrote: »

Things to do, in order;

1 Rainy day fund (More than £2k. £5K as a minimum and you can still get good interest on that)
2 Start pension and pay enough to get maximum employers contribution as a minimum
3 Save for house in a LISA (if you are planning to buy one of course )
4 Start investing in an ISA.

You appear to be around half way to point 1.

And OP already has a property so can skip step 3

AnotherJoe

I missed that, thanks TS. (and with a house to care for£2k is definitely inadequate as a rainy day fund)

Cameron1590_2

Thanks all for the positive input.

All advice taken and noted, having not long purchased my first house (two years ago). We are still in the process of fitting a new kitchen etc.

I do have other savings for this work however I completely agree my emergency fund needs to be much greater than it currently is. I will continue to top this up and hopefully start a S&S fund shortly once I have around 5k saved.

Thanks
Cameron